US conglomerate Seaboard Corporation has embarked on an intensive campaign aimed at winning shareholders to unlock its quest to take control of Kenyan miller Unga Group #ticker:UNGA.
Seaboard Corporation has placed a bid to buy the Nairobi Securities Exchange-listed firm at the price of Sh40 per share and is required to win the support of investors controlling at least 75 per cent of Unga Group for the deal to sail through.
People familiar with the deal said the US firm has scheduled a series of meetings with a section of Unga shareholders in Nairobi starting today.
“Seaboard has called for a meeting. We expect the discussion to dwell on Unga’s value and the offer price. We expect that there could be some flexibility and Seaboard could raise its offer,” said one shareholder, who is set to attend the meeting.
Unga Tuesday told its shareholders that Seaboard has up to June 6 to revise its offer, adding that all investors will be entitled to a new price should one materialise.
Seaboard, which already owns a 2.92 per cent stake in Unga, needs shareholders owning at least 21.1 per cent to tender their shares for the offer to proceed. It has already secured the support of the Philip Ndegwa family, which has a controlling 50.93 per cent equity, and the two parties are working in concert to take the miller private.
Unga’s board has endorsed Seaboard’s controversial offer, taking the lower valuation out of several presented to it by Faida Investment Bank, the firm it hired as an independent financial adviser (IFA).
Faida said in its report that the miller’s value per share could be anywhere between Sh67.19, Sh39.82 and Sh39.01 when assessed based on liquidation, cash flows and peer values respectively.
“The board is recommending that shareholders accept the offer price as representing a fair return on investment in the current circumstances,” Unga’s board said in a statement.
“Whilst the board recognises that the Sh40 offer is at the lower end of the IFA’s valuation range, the board deems it consistent with valuations of the business as a viable going concern and in line with normal share price performance for the counter.”
Unga says that directors associated with the Ndegwas – Jinaro Kibet, Alan McKittrick and Andrew Ndegwa— did not participate in the decision to endorse Seaboard’s offer owing to their interest in the transaction.
The miller’s board rejected the higher assessment of Sh67.19 per share, saying the company will have to be liquidated to unlock the value, adding that shareholder interests should not supersede those of other parties including employees.
“It is the board’s duty to promote the success of the company for the benefit of its members as a whole, as well as the interests of stakeholders such as the company’s employees, suppliers and consumers of its products, along with the long-term well-being of the business as a going concern,” the board said in its justification.
Seaboard says Unga suffers several disadvantages from its status as a publicly traded company, including disclosure of competitive information, costs of regulatory compliance and an ownership structure that discourages the entry of new strategic investors.